KERC Sets New Benchmark Tariff of Rs.4.36 (~$0.064)/kWh for Grid Connected Large-Scale Solar Projects for FY2017-18

The Karnataka Electricity Regulatory Commission (KERC) has set Rs.4.36 (~$0.064)/kWh as the benchmark tariff for grid-connected large-scale solar projects for financial year (FY) 2017-18. The new benchmark tariff will be applicable to all new grid-connected MW-scale solar PV projects entering into power purchase agreements (PPA) on or after April 1, 2017, and before April 1, 2018.

The new benchmark tariff is Rs.2.15 (~$0.033) less than the benchmark tariff of FY2016-17. The KERC has taken into consideration the declining module prices while determining the new benchmark tariff.

The KERC had proposed a new benchmark tariff in March of Rs.4.51 (~$0.066)/kWh for solar PV projects. The final benchmark tariff set is about 3 percent lower.

The KERC has regulated, the tariff determined will also be applicable to those grid connected megawatt-scale solar PV projects for which PPAs were entered into before April 1,2017, but, are not commissioned within the specified commercial operation date (COD) and achieve COD during the period from April 1, 2017, to March 31, 2018. The approved tariff in respect of solar thermal projects will continue per the commission’s order dated July 30, 2015 and solar rooftop PV projects will remain the same per the commission’s order dated May 2, 2016, until March 31, 2018.

In the new tariff order, the KERC has also specified a debt repayment period of 12 years for project developers.

According to Mercom’s India Solar Project Tracker, Karnataka has 1.1 GW of installed solar capacity as of March 31, 2017, and almost 2.9 GW of development pipeline.

Source: Mercom

Posted in DISCOM, India, Karnataka, PV, Renewables, Solar, Transmission and Distribution | Tagged , | Leave a comment

Solar alliance brings sunshine to Bonn summit via Common Risk Mitigation Mechanism (CRMM)

A multilateral market platform for financial risk mitigation proposed at the Bonn climate summit is expected to create a transformative ecosystem for solar power in tropical countries

Countries with high solar power potential have put their muscle behind a common risk mitigation mechanism that could unlock up to USD 15 billion of investments to add 20 GW of photovoltaic capacity in more than 20 countries.

The proposed Common Risk Mitigation Mechanism (CRMM) is a multilateral market platform that has received initial support from countries that include India, France, Australia, Mali, Namibia and Nigeria, among others. A CRMM feasibility study released at the India Pavilion at the climate negotiations in Bonn outlines the 20 GW plan as a pilot phase with an eventual aim to leverage billions of dollars of impact capital to catalyse USD 1 trillion of domestic and international private institutional capital. CRMM could help build over 1 TW, or 1000 GW, of solar power generation capacity in low and middle-income countries by 2030, the study claimed.

The study was designed by a multi-stakeholder taskforce comprising the Council on Energy, Environment and Water (CEEW), the Confederation of Indian Industry (CII), the Currency Exchange Fund (TCX) and the Terrawatt Initiative (TWI) on the request of 17 signatory countries of the International Solar Alliance (ISA).

“As much as 75% of the cost of solar power is the cost of finance,” said Arunabha Ghosh, CEO of CEEW. “The pooling of risks would reduce double counting of risk variables, providing a single guarantee cover at prices lower than the additive price of existing insurance products.”

The study presents recommendations to governments of low and middle-income countries to accelerate their solar energy generation capacity, at scale and in local currency. The idea is to develop a sustainable financial ecosystem, centred around an international guarantee mechanism, which could pool various types of risks and pool projects across many countries to lower the costs of hedging against those risks.

Financing of solar power generation assets in a majority of developing countries suffers from a lack of risk mitigation tools, a high perception of risk among investors, high transaction costs, small project sizes, and lack of scale. Investors, developers, and other stakeholders need transparency and clarity of process, which is often missing in some countries. CRMM is designed to create a global solar market, boosting confidence among the international development community and private and public institutional financiers, to help meet international climate targets in countries with high solar potential.

The proposed mechanism is aligned with the aims of the ISA, jointly launched by India and France at the 21stConference of Parties at Paris in 2015. It is set to become a treaty-based intergovernmental international organisation on 6 December, with the Republic of Guinea becoming the 15th country to ratify the ISA Framework Agreement last week. The total number of ISA member countries has now increased to 44. “There are 121 countries totally or partially within the tropics of Cancer and Capricorn, and are therefore eligible to be full members of ISA,” Anand Kumar, Secretary at India’s Ministry of New and Renewable Energy (MNRE), said in Bonn.

“CRMM — the Paris Guarantee Fund — is a major step in the implementation of the Paris Declaration of the International Solar Alliance adopted on 30 November 2015 and of the ISA Programme aimed at mobilising affordable finance at scale,” said Upendra Tripathy, Interim Director General of ISA. “This instrument will dramatically lower the cost of finance for renewable energy and the overall price of electricity.”

The CRMM pilot phase will be launched in 2018. The aim of the pilot is to achieve a critical size and demonstrate its cost effectiveness in pooling and aggregating capital, and mitigating risks at an international level.

Indian experience

The Indian experience in developing large scale solar energy has shown that adequate distribution of risk is critical to project success. “The CRMM is a welcome announcement by the International Solar Alliance, and can give India an opportunity to show other developing countries a path forward towards accelerated solar deployment.” said Bhaskar Deol, CEO of Mynergy, which provides financing solutions for distributed renewable energy projects in India. “Success for ISA member countries will depend on their ability to mobilise finance for small scale, distributed solar projects, which suffer from risks such as off-taker risk, currency risk and policy uncertainly.”

Mudit Jain, senior manager at Bridge to India, a cleantech consultancy, said the biggest impediment for solar project development in low-middle income countries is the scarcity and high cost of capital. “If the CRMM mechanism can mitigate the political, off-taker and foreign exchange risks, it would definitely attract the low-cost capital, ultimately leading to large-scale solar deployment,” Jain told indiaclimatedialogue.net.

“However, USD 1 billion may not be sufficient to attract USD 15 billion capital in low-income countries where the risk is much higher and will require higher provisions for risk mitigation. I presume that the pilot phase would be targeted in the countries with already existing mechanism to lower the aforementioned risks to a certain extent, including India.”

CRMM could have a positive impact because it will reduce the amount of effort that is required in raising funds, which is a major concern in India, according to Ritesh Pothan, an expert in the clean energy sector. “If it is able to reduce the interest rate and able to bring in a good rate, then there is a lot of scope for doing storage and a lot of scope for growth in the Indian market, not only from the solar perspective, but also from the ancillary to solar industry as well,” he said.

Many big companies in India are opting for onsite solar power projects – but most micro, small and medium enterprises and growing businesses – find it difficult to bear high initial cost of solar projects as availing finance is difficult. “Such an initiative will help the country in solar adoption,” Anshumaan Bhatnagar, Director of Sunshot Technologies Pvt Ltd, told indiaclimatedialogue.net.

However, a lot of basic work will have to be done before starting any kind of mitigation process as part of this mechanism, says Ajith Gopi, Head of Technical Consultancy Division and Programme Officer at Agency for Non-conventional Energy and Rural Technology (ANERT), a government of Kerala organisation.

“Most of the investments are coming in the solar off-grid sector, which is a major area for South East Asian countries and sub-Saharan countries. The way to implement it is you have to find a strategy by getting a clear picture of how we can implement this in mostly the off-grid sector, since a majority of the companies are involved in the grid-connected market,” he said. “It will be very difficult for private companies to travel to remote locations and provide off-grid solutions to societies.”

This however would not be a major impediment to the solar energy initiative of India and other member countries, Indian officials said. Although coal will continue to be use in the Indian energy sector, “we’re going ahead with our focus on renewable energy and will have 40% of our power from renewable energy by 2040,” said C.K Mishra, Secretary at India’s Ministry of Environment, Forests and Climate Change (MOEFCC).

“We are targeting 1,000 GW (1 TW) solar in all ISA countries by 2030 (in addition to what has already been installed),” said Renewables Secretary Anand Kumar.

Source: India Climate Dialogue

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Common Risk Mitigation Mechanism – Feasibility Study – Nov 2017

This feasibility report on the Common Risk Mitigation Facility (“CRMM”) (the Study) has been driven by governments of seventeen (17) nations with strong solar potential – Argentina, Australia, Brazil, Burkina Faso, Cameroon, Ivory Coast, India, France, Mali, Namibia, Niger, Nigeria, Senegal, Seychelles, Chad and Yemen – as a way for scaling investments in solar power generation in their countries and in other developing countries. In May 2017, these nations mandated a multi-stakeholder task force consisting of the Terrawatt Initiative, The Currency Exchange Fund (TCX), the World Bank Group, the Council on Energy, Environment and Water (CEEW), and the Confederation of Indian Industry, (the “Task Force”) to conduct a study on the feasibility of implementing CRMM, including broad based consultation with relevant stakeholders (see Annex 1 : Draft Concept note.).

The main objectives were stated in this extract taken from the Office Memorandum:

The study is in line with the framework of the International Solar Alliance (ISA); and specifically addresses its mandate to aggregate and harmonize frameworks for investment.1 In particular, this study aims to operationalise ISA’s programme for “Affordable Finance at Scale” initiated by both India and France. This is open to all nations on a voluntary basis, and as part of this initiative, participating countries propose to2:

1 2

§ Share and aggregate their financing needs for solar production assets through a common platform;

§ Harmonize their contractual and regulatory frameworks to adopt best international practices to the extent necessary for attracting investments;

CEEW – CRMM Feasibility Study 14 Nov 2017

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RERC Sets Benchmark Tariff of ₹3.93/kWh for Solar PV Projects in Rajasthan for FY 2017-18

The Rajasthan Electricity Regulatory Commission (RERC) has fixed ₹3.93 (~$0.06)/kWh as the generic tariff for solar PV projects without accelerated depreciation (AD) in Rajasthan. The tariff is levelized for 25 years. The AD component of the tariff has been fixed at ₹0.27 (~$0.004)/kWh. The new benchmark tariff with AD is ₹3.66 (~$0.056)/kWh.

This tariff will apply to all solar PV projects with signed power purchase agreements (PPA) on or before March 31, 2018, and commissioned on or before March 31, 2019.

RERC Solar Tariff Order for FY 2017-18

The RERC also stated in its tariff order that for rooftop solar PV systems covered under RERC Net Metering Regulations 2015, net excess energy (more than 50 units) exported to the grid by the consumer would be payable at the tariff rate of ₹3.93 (~$0.06)/kWh until the next tariff order is issued by the commission.

This tariff would be payable to all rooftop solar systems developed under the net metering policy during financial year (FY) 2017-18 and earlier, and would be irrespective of any capital grant subsidies or AD benefits.

The RERC has stated that for utility-scale solar projects with capacity more than 5 MW, the generic tariff will act as the upper tariff ceiling for participants of state tenders.

The new benchmark tariff of ₹3.93 (~$0.06)/kWh without AD is 27 percent less than the benchmark tariff of ₹5.40 (~$0.083)/kWh without AD set by RERC in FY 2016-17. In FY 2016-17, the benchmark tariff with AD was ₹4.85 (~$0.074)/kWh, 25 percent more than the new benchmark tariff with AD of ₹3.66 (~$0.056)/kWh.

Module and project cost not based on reality: When calculating the project cost of a solar generation project, the RERC has considered operation and maintenance (O&M) expenses, depreciation, interest on long-term loans, interest on working capital, and return on equity as fixed cost components. The RERC has fixed ₹35.84 million (~$0.55 million)/MW as the benchmark capital cost for solar PV projects in Rajasthan for FY 2017-18. This fixed cost takes into consideration module costs of just $0.25 (~₹16.4)/W. With current module prices in the $0.35-$0.38/W range, these cost considerations are simply not realistic.

“The benchmark tariff setting exercise is not based on reality. For the same time period, Rajasthan has taken a module price consideration of ₹0.25/W while Karnataka has considered its module costs based on ₹0.35/W. They just want to get to a number that is comfortable to them,” said Raj Prabhu, CEO of Mercom Capital Group.

Break-Up for Capital Cost for Solar Projects for FY 2017-18

Deemed Generation/Must Run Provision: The commission rejected deemed generation for solar and considers it appropriate that the “must run” status must continue and should not be subject to the merit order dispatch principle. However, must run status will not apply in the case of a system operational constraint, which creates an easy way to circumvent the must run status.

There was no consideration given to additional costs associated with GST while calculating capital costs.

Mercom reported in April 2017 that both Tamil Nadu (₹4.50/kWh) and Karnataka (₹4.36/kWh) have set the solar benchmark tariff for FY 2017-18.

According to Mercom’s India Solar Project Tracker, Rajasthan has ~2.1 GW of installed large-scale solar capacity as of September 2017, and almost 1.2 GW under development.

Source: Mercom

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Module quality emerges as new marketing tool for the solar industry

As soon as solar became an asset class, all issues related to component selection – including the modules, the materials used for the module assembly stages, and plant design and maintenance – then moves to a different level, and this can be seen clearly today for utility-based solar sites. Image: Hanwha Q CELLSAs soon as solar became an asset class, all issues related to component selection – including the modules, the materials used for the module assembly stages, and plant design and maintenance – then moves to a different level, and this can be seen clearly today for utility-based solar sites. Image: Hanwha Q CELLS

With many of the top-20 module suppliers to the solar industry now having multi-GW shipment volumes, attention has turned firmly to assessing metrics that companies can use to benchmark the quality and reliability of shipped products against their competitors.

Almost every week, a different module supplier sends out marketing collateral claiming to be top of a table or the highest in a ranking, performed by a third-party body. It is extremely confusing to those immersed in the daily production analysis of the module suppliers/producers in question: far less, the downstream companies that have to make module purchasing decisions from a less informed perspective.

Indeed, almost every trade show these days seems to have a ‘quality’ workshop or forum bolted on with a different subset of stakeholders, where inevitably the conversation drifts to the difficulty in balancing site capex with project viability, purely from a build perspective.

The backdrop to this confusion has been a major factor in PV-Tech deciding to launch the PV ModuleTech 2017 event, in order to get clarity and informed discussion on these issues, and subsequently propagated through the PV-Tech.org portal to explain to the global solar audience what is really going on, and the issues that are important for correct module selection for major solar investment projects.

Are we moving towards any industry standards?

The range of third-party bodies weighing in on the quality issue has certainly grown in the past few years, and perhaps not unsurprisingly given the growth of the industry and the investor profile that fuels the utility segment (in comparison to rooftop driven segments that were the main driver in the feed-in-tariff days of early solar growth).

As soon as solar became an asset class, all issues related to component selection – including the modules, the materials used for the module assembly stages, and plant design and maintenance – then moves to a different level, and this can be seen clearly today for utility-based solar sites.

Many different labels are being used by module suppliers, including third-party certification, test-and-inspection, bankability studies, factory audits, and purely academic studies such as the misleading Tier-1 tables often disseminated in the public domain. Some companies combine different aspects of these, but as yet, it is fair to say that an industry-wide standard has not emerged as to the definitive or ‘gold’ standard that all companies should strive towards.

Sub-contracting & OEM outsourcing is still the bigger issue

With factory audits and module inspection being a key feature of any quality/bankability study, and featuring in most of the third-party assessments of module suppliers, we are compelled to return to one issue that is still muddying the waters for many of the leading c-Si module suppliers: in-house component production.

How can rankings of suppliers be done with accuracy when so much of the key components (wafers, cells and modules) are outsourced at levels that change considerably across any given calendar year? Even if one was to label wafers as raw materials consumables (which they are certainly not), then we still have the fundamental issue of contracted module assembly, where a factory audit of the module supplier selling the product becomes almost superfluous.

Therefore, one could argue that as a starting point, ‘quality’ is by default heavily weighted to those companies that have production and materials supply ownership over the greatest fraction of their shipped modules. This is a key topic that has become somewhat lost in the past few years, with so many fixated on GW-levels of annual shipments, and so many project developers and EPCs are essentially blind to this, not to mention the asset owners and managers of acquired as-built sites.

In this context, we decided to do some new analysis based on the leading module suppliers that will be speaking at PV ModuleTech 2017, in Kuala Lumpur on 7-8 November 2017.

First, let’s return to the module supplier rankings by shipment for last year, where we ranked companies purely from a shipment standpoint for global, China-only, and Non-China markets.

The eight leading module suppliers by shipped volumes, including the top-5 in China and the top-6 for non-China end-markets will be speaking at PV ModuleTech 2017.The eight leading module suppliers by shipped volumes, including the top-5 in China and the top-6 for non-China end-markets will be speaking at PV ModuleTech 2017.

Excluding Yingli Green and Wuxi Suntech (that have less presence outside China now compared to other Chinese global module brands), the only companies from our listing above that are not yet confirmed to be speaking at PV ModuleTech are SunPower, SolarWorld and REC Solar.

However, having the leading eight modules suppliers globally explain how their product supply is ticking all the boxes that are being used by the certification bodies, test houses and independent engineers is almost certainly a first for any global conference in the solar industry, and will be a massive takeaway for all the EPCs and project developers that are set to be in the audience in Kuala Lumpur on 7-8 November.

Therefore, as a starting point, we confine our ‘in-house’ production statistics here to the leading eight module suppliers that are shown above and will be delivering key talks at PV ModuleTech.

Explaining the methodology

Firstly, we need to standardize c-Si and thin-film, with First Solar the only company in our ‘quality’ module grouping here that is based on thin-film.

The obvious way to do this is to treat polysilicon like glass, and then basically the thin-film production line is doing the c-Si equivalent value-chain roles of ingot/wafer/cell/module.
Another way of looking at this is from the other perspective. A thin-film fab in the c-Si world would have ingot/wafer/cell/module production all in one building and 100% in-house supplied/produced, so that only chunks of polysilicon were going into the factory, and only finished modules would be going out. The closest we ever got to this actually happening was the REC Solar concept in Tuas, and currently can be seen in Adani’s mid-term strategy at Mundra.

The only subjective point comes down to the significance or weighting placed on using in-house/third-party ingots, wafers, cells and modules, and one can make arguments one way or another on this. We chose a simple pathway here that is by no means conclusive, but serves to explain the key message visually.

Wafer supply was selected as the least sensitive, with cell the most important, and modules somewhere in between (although it can be hard to really know whose cells are being used when the modules are being completely outsourced and simply rebranded by the final seller to the EPCs or installers).

So we based the rankings of in-house production ‘quality’ based on wafers, cells and modules only, and then used this weighted number as a fraction of the final module shipment levels from the companies.

The results of this are shown below now:

While First Solar is the only 100% in-house producer across all the major module suppliers today, with a greater portion of wafers (LONGi) and cells/modules (JA Solar and Hanwha Q-CELLS) produced in-house for shipped c-Si module volumes, these three c-Si leaders have the greatest claim to in-house traceability going all the way back to bill-of-materials involved.While First Solar is the only 100% in-house producer across all the major module suppliers today, with a greater portion of wafers (LONGi) and cells/modules (JA Solar and Hanwha Q-CELLS) produced in-house for shipped c-Si module volumes, these three c-Si leaders have the greatest claim to in-house traceability going all the way back to bill-of-materials involved.

A key factor in some of the leading names having lower percentage rankings in the above graphic can be traced back directly to the individual companies’ strategies to gain market-share and show investors year-on-year shipment growth figures, backed up by having global branding status that remains the exclusive domain of no more than 20 module suppliers globally today.

The conclusions from the above analysis should certainly be factors that feed into any third-party exercise that then looks at directly measurable factors across component production, material selection, module testing and other supplier bankability factors.

Source: PV-Tech

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TANGEDCO 1500 MW

“Procurement of 1500 MW of solar power from private developers against specification   no.CE/NCES/OT.No.1/2017-18”

  1. Details of prices quoted by the eligible bidders
Sl.

No.

Name of the bidder Capacity in MW Offered rate in Rs.P.per unit
1 M/s.Raasi Green Earth Energy Pvt.Ltd., 100 3.47(L1)
2 M/s.Sai Jyothi Infrastructure Ventures (P) Limited 54 3.60(L2)
3 M/s.Solitaire BTN Solar Private Limited 150 3.69(L3)
4 M/s.Narbheram  Vishram 100 3.85(L4)
5 M/s.Rays Power Infra (P) Limited 200 3.85(L5)
6 M/s.NVR Energy Private Limited 100 3.85(L6)
7 M/s.Dynamize Solar (P) Limited 5 3.87(L7)
8 M/s.ReNew Solar Energy (Rajasthan) Private Limited 100 3.89(L8)
9 M/s.SRL Green and Clean Power Private Limited, Chennai 6 3.90(L9)
10 M/s.Clean Solar Power (Ludhiana) Pvt Ltd. 104 3.90(L10)
11 M/s.Udayasooriyan 1 3.90(L11)
12 M/s.Talettutayi Solar Project Two (P) Limited 50 3.90(L12)
13 M/s.Dev International 1 3.95(L13)
14 M/s.G.R.Thanga Maligai (Firm) 10 3.96(L14)
15 M/s.G.R.Thangamaligai & Sons 10 3.96(L15)
16 M/s.G.R.T. Silverwares 10 3.96(L16)
 

17

M/s.Shapoorji Pallonji Infrastructure Capital Company (P) Ltd.  

50

 

3.96(L17)

18 M/s.NLC India Limited 1500 3.97(L18)
19 M/s.VSR Solar Power (P) Ltd. 50 3.98(L19)
20 M/s.G.R.T Jewellers (India) Private Limited 52 3.99(L20)
21 M/s.Indira Damper Industries 5 4.00(L21)
22 M/s.C.R.Garments 2.5 4.00(L22)
23 M/s.M.A.G & Company 2.5 4.00(L23)
24 M/s.Indira Industries 5 4.00(L24)
25 M/s.Balavimodhan Power Process (P) Ltd., 5 4.00(L25)
Total 2673

 

  1. Details of successful bidders after negotiation and price matching

 

Sl.

No.

Name of the bidder Capacity in MW Negotiated rate
1 M/s.Raasi Green Earth Energy Pvt.Ltd., 100 3.47 (L1)
2 M/s.Sai Jyothi Infrastructure Ventures (P) Limited 54 3.47
3 M/s.Solitaire BTN Solar Private Limited 100 3.47
4 M/s.Narbheram  Vishram 100 3.47
5 M/s.Rays Power Infra (P) Limited 100 3.47
6 M/s.NVR Energy Private Limited 100 3.47
7 M/s.Dynamize Solar (P) Limited 5 3.47
8 M/s.ReNew Solar Energy (Rajasthan) Private Ltd. 100 3.47
9 M/s.Udayasooriyan 1 3.47
10 M/s.Talettutayi Solar Project Two (P) Limited 50 3.47
11 M/s.Dev International 1 3.47
12 M/s.G.R.Thanga Maligai (Firm) 10 3.47
13 M/s.G.R.Thangamaligai & Sons 10 3.47
14 M/s.G.R.T. Silverwares 10 3.47
15 M/s.Shapoorji  Pallonji  Infrastructure Capital Company (P) Ltd. 50 3.47
16 M/s. NLC India Limited 709 3.47
Total 1500

 

Posted in DISCOM, India, Renewables, Solar, Solar PV, Tamil Nadu | Tagged , , , , , , , , , , , , , , , | Leave a comment

10 years of R&D spending analysis of 12 key PV module manufacturers

R&D spending patterns

Combined R&D expenditures of 12 major PV module manufacturers in 2016, tracked since 2007, declined by approximately 4.4% in 2016 to US$519.3 million (see Chart1), compared to US$542.9 million in 2015. As 2015 expenditures were a new record high, 2016 becomes the second highest year of spending and 2014 the third highest. All three years highlight total combined annual R&D expenditures above US$500 million.

Combined R&D expenditures of 12 major PV module manufacturers in 2016.Combined R&D expenditures of 12 major PV module manufacturers in 2016.

Interestingly, two expenditure peaks, both above the US$500 million mark have occurred in the last 10 years with 2011 standing out at US$510 million, being the first time the US$500 million mark was exceeded and five years later in 2015, when second peak occurred.

There were four manufacturers that reduced R&D spending in 2016 (see Chart 2), these included First Solar, Yingli Green, Renesola and REC Group. All four had also reduced R&D spending in 2015 from 2014 levels. R&D spending had bottomed in 2012, when the PV industry was going through its worst period of overcapacity, yet that year saw six companies reduced spending, many for the first time.R&D spending levels of 12 major PV module manufacturers in 2016.

R&D spending levels of 12 major PV module manufacturers in 2016.

Notable in the expenditure decline year-on-year were Yingli Green, Renesola and First Solar, which reduced spending by 65.4%, 37% and 4.4%, respectively.

The overall increase in spending in 2014 and 2015 had led to more companies spending above the US$20 million mark annually, which left only two companies (Canadian Solar and REC Group) below that level. With REC Group estimated to have reduced spending slightly in 2016 and Canadian Solar making a marginal increase but below the US$20 million mark, no changes at this low level occurred in 2016.

Trina Solar was estimated to have moved into the above US$40 million to US$60 million range in 2016, which was populated by Renesola and Hanwha Q CELLS in 2015. However, with Renesola significantly reducing expenditures, only Trina Solar and Hanwha Q CELLS populated the US$40 million to US$60 million range in 2016.

The US$20 million to US$40 million range is now the most populated with six companies (SolarWorld, Renesola, JinkoSolar, Suntech, Yingli Green and JA Solar). More accurately, these six manufacturers are clustered tightly together with the lowest spender in this bracket being Yingli Green with US$21.2 million spent on R&D activities in 2016 and the highest, SolarWorld spending US$27.9 million in 2016 and before its bankruptcy and subsequent rebirth.

In relation to the two manufacturers (First Solar and SunPower) in the top echelons of R&D expenditure the gap between the two firms has closed significantly for the first time. With First Solar reducing spending for two years in a row and SunPower increasing spending three years in a row, resulting in the two companies being separated by only US$8.6 million, compared to US$31.6 million in 2015 and US$70.6 million in 2014.

Both First Solar and SunPower spent over US$100 million each on R&D activities in 2016, which was the first time for SunPower (US$116.1 million) and the sixth time (consecutively) for First Solar (US$124.7 million).

On a year-on-year R&D expenditure increase basis, Trina Solar was estimated to have increased spending by around 24%, while Suntech and JinkoSolar reported the same 17.5% increase and SunPower a 17.3% increase. Other manufacturers (Hanwha Q CELLS, Canadian Solar, JA Solar and SolarWorld) increased spending in the single-digit percentage range.

R&D staffing patterns

A key difference in 2016 to previous years covered by this report was the higher decline (9.5%) in the number of employees designated to R&D activities than when R&D expenditure also declined but at a lower (4.4%) rate.

Combined R&D Headcounts in 2016.Combined R&D Headcounts in 2016.

After a major decline in the number of employees designated to R&D activities in 2013, staffing levels have rebounded strongly. Having reached an initial headcount peak in 2011 of 3,575, numbers declined to a low of 2,911 in 2013. With higher spending came increasing staffing as well as the previously highlighted, re-designation of R&D personnel at Yingli Green in 2010 and Trina Solar in 2014, which significantly weighted overall staffing levels higher.

A total of eight manufacturers in 2015 added R&D headcount. However a total of nine manufacturers (including estimated) reduced R&D headcount in 2016 (See Chart 4) These included manufacturers (Trina Solar, JA Solar, SunPower and Hanhwa Q CELLS) that actually increased R&D spending in 2016.

Key 12 PV Module Manufacturers R&D Headcount by Company in 2016.Key 12 PV Module Manufacturers R&D Headcount by Company in 2016.

The four manufacturers (First Solar, Yingli Green, Renesola and REC Group) that reduced R&D spending in 2016 also reduced R&D headcount in 2016. It should be noted that both First Solar and REC Group headcount are estimated and the reductions negligible.

The standout reductions in R&D headcount come from ReneSola (162), Yingli Green (103) Trina Solar (188 estimated), Hanwha Q CELLS (78) and SunPower (43).

The R&D headcount reductions in 2016 from the four highlighted manufacturers are generally due to restructuring, cost reductions and business transitions. In the example of Yingli Green, a major restructuring has been underway, resulting in a massive 3,908 headcount reduction by the end of 2016. A company in transition away from manufacturing, ReneSola also reduced its overall employee headcount by 524 in 2016. On-going cost reduction strategies at Hanwha Q CELLS led to 1,901 job losses in total in 2016.

In contrast, SunPower actually increased its overall headcount in 2016 by 1,714. However, SunPower has since closed facilities and is undergoing a major restructuring effort.

The total number of employees designated to R&D activities from the 12 PV module manufacturers tracked was 5,002 in 2016, down from 5,533 in 2015, a decline of 531 or 9.5%.

R&D spending rankings in 2016

Once again there were certain changes to the spending rankings (See Chart 5) as cuts impacted the middle cluster of manufacturers, while the gap at the top may have closed sharply, there were no changes to the rankings for the first and second positions in 2016.

Key 12 PV Module Manufacturers R&D Spending (US$ Millions) Ranking in 2016.Key 12 PV Module Manufacturers R&D Spending (US$ Millions) Ranking in 2016.

First Solar

First Solar once again has been ranked first in annual R&D spending, making it the eighth consecutive (2009 – 2016) year for the CdTe thin-film module manufacturing leader, despite a second year of expenditure reductions and confirms the view highlighted in the 2015 report that R&D spending would seem to have peaked in 2014.

The decrease in R&D expenditure was partially due to a lower R&D headcount but also the cycle in developing its large-area Series 6 modules, with emphasis shifting to capital expenditures to completely migrate all manufacturing (including new build) to its next-generation CdTe modules. Less emphasis is also being attached to PV systems development, such as trackers, preferring to collaborate with leading third party suppliers, especially with the Series 6 module transition.

The company is continuing to operate its ‘vertical integration’ R&D model from advanced research to product development through to manufacturing roll-out, which includes continue module conversion efficiency improvements, despite the large-area module format change.

First Solar held two world records for CdTe PV efficiency, achieving an independently certified research cell efficiency of 22.1% and a full-area module efficiency of 18.2%.

SunPower Corp

SunPower was ranked second in 2016, the second consecutive year for the company that has the highest efficiency solar cells and modules that deploy IBC (Interdigitated Back Contact) cell technology.

In fairness to SunPower, apart from one year (2014) when Yingli Green spent more on R&D than SunPower, it had easily been the second highest spender since 2010.
The boost in spending in 2016 does not correlate to increase R&D staffing levels, instead its surrounds its P-Series module and new PV systems development and roll-out for residential, commercial and utility-scale downstream markets.

The increase can also be attributed to establishing a new R&D facility at its headquarters in San Jose, California. Only recently has SunPower Corp said that it had invested around US$25 million in the last 12-months on the facility, which includes several high-volume production-sized manufacturing tools and automation, and specialized testing equipment, designed to support its next-generation of high-efficiency N-type monocrystalline IBC solar cells and modules, which are being designed with greater emphasis on lower cost manufacturing. The new facility was said to be housing around 100 engineers and support staff.

SunPower noted that the new R&D facilities pilot line, which had already produced the first next-gen module to replace its X Series (25% conversion efficiency) solar cells (22% conversion efficiency) modules.

Hanwha Q CELLS

Despite an R&D headcount reduction, Hanwha Q CELLS moved up the rankings in 2016, due to spending almost US$50 million and Yingli Green’s continued drastic spending cuts due to major restructuring of the company. The company was ranked third in the spending rankings in 2016, up from fourth in 2015.

R&D focus continued to be centred on P-type multicrystalline PERC and mono-PERC cell efficiency gains and production cost reduction initiatives such as migrating all capacity to the larger (156.75mm by 156.75mm) wafer size.

Average P-type multi PERC cell conversion efficiencies have reached 20% and 22% for P-type mono PERC cells. Other R&D efforts have continued on LID and PID process limitation.

Trina Solar

Increased R&D spending in 2016 helped Trina Solar jump from being ranked sixth in 2015 to being ranked fourth in 2014. The company also benefited from the spending cuts by Yingli Green and ReneSola to move up two ranking positions.

Trina Solar had increased R&D spending in the first half of 2016, compared to the prior year period. However, due to delisting from the NYSE the company was not obliged to provide further quarterly reports or a 2016 annual report.

This meant that full-year 2016 R&D spending figures and R&D headcount numbers was estimated based on the first half year publically reported details.

Recently, Trina Solar reported that R&D efforts with N-type monocrystalline IBC solar cells had led to a conversion efficiency of 24.13%, which was verified by the Japan Electrical Safety & Environment Technology Laboratories (JET). This was produced on 156×156 mm solar cells with a low-cost industrial IBC process, featuring conventional tube doping technologies and fully screen-printed metallization. In December 2014, Trina Solar announced a 22.94% total-area efficiency for an industrial version, large size (156x 156mm2, 6″ substrate), IBC solar cell.

The company has also been developing PERC and bifacial cells in recent years and reported in 2016 that it had achieved a new world conversion efficiency record of 22.61% for a high-efficiency P-type monocrystalline PERC solar cell, independently confirmed by the Fraunhofer ISE CalLab in Germany.

SolarWorld AG

SolarWorld AG increased R&D spending to US$27.9 million in 2016, up from US$25.9 million in the previous year. Also benefiting from spending cuts at Yingli Green and ReneSola, the company was ranked seventh in 2015 but moved up two positions to fifth in 2016.

The company has focused resources on high-efficiency P-type multicrystalline and monocrystalline PERC solar cell development in recent years including bifacial cells. However, the company realigned to focus on mono-PERC and bifacial technology.

The company had achieved average efficiencies of over 22.0% with PERC cells manufactured on its high-throughput pilot line with 5BB and M2 large area 156mm x 156mm wafers. SolarWorld was working on conversion efficiencies above 24.0% that retained screen-printing PERC and other process improvements.

However, in May 2017 the company entered insolvency proceedings but its German manufacturing and R&D operations were acquired by former founder and chairman of SolarWorld AG, Dr. Ing. Eh Frank Asbeck, which included manufacturing and R&D operations under the subsidiaries SolarWorld Industries Sachsen GmbH, SolarWorld Innovations GmbH as well as SolarWorld Industries Thüringen GmbH.

The new company, SolarWorld Industries plans to continue to focus on mono PERC and bifacial cell R&D and production in partnership with Qatar Solar Technologies, its new 49% shareholder.

ReneSola

With ReneSola cutting both R&D expenditure and headcount in 2016, it was relegated to fifth from fourth in the rankings, spending US$27.3 million that was primarily attributed to continued development of technologies to manufacture high-conversion efficiency solar cells with improved performance.

The company was able to achieve conversion efficiency rates of 21.1% for P-type monocrystalline cells and 18.6% for P-type multicrystalline cells manufactured using its in-house developed solar wafers.

However, ReneSola is transitioning its business to become a downstream PV project developer and in 2017 has announced a potential sale of its manufacturing and therefore main R&D operations.

JinkoSolar

Having been a perennial low spender, JinkoSolar was ranked seventh in 2016, up two ranking positions from ninth in 2015 after spending US$26.1 million on R&D, compared to US$22.2 million in the previous year.

The company outstripped spending by JA Solar in 2016 and was supported by the spending cuts forced upon Yingli Green as it restructured its operations.

JinkoSolar begun research on its “Eagle+” solar modules, which are expected to have multicrystalline cells that reached conversion efficiencies of approximately 20.4% in lab tests by a third party in 2016. The company has also achieved a record P-Type multicrystalline cell efficiency of 21.63% in 2016.

The company also made a decision to increase P-type mono PERC R&D including migrating to diamond wire and ‘black silicon’ texturing.

Wuxi Suntech

Wuxi Suntech now the PV module manufacturing arm of Shunfeng International Clean Energy (SFCE) increased R&D spending to US$25.7 million in 2016, up from US$20.2 million in 2015 after full integration into SFCE.

R&D activities have focused on continued efficiency improvements for PERC cell technology. The company has achieved average cell efficiency of over 21%, and champion cell efficiency of 21.3% in production.

The company continues to collaborate on a hydrogenation process with the UNSW and confirmed the development and testing with Taiwan Carbon Nanotube Technology Corporation (TCNT) of a high-strength, lightweight carbon and glass fiber composite PV module frame, the first such development of its kind in the PV industry.

JA Solar

Although JA Solar increased R&D spending in 2016 to US$25.5 million, up from US$23 million in 2015 it was ranked ninth, compared to eighth in 2015.

Importantly, JA Solar is the only manufacturer in the group study that has increased R&D spending consecutively for the last 10 years, a remarkable feat, considering the dynamics of the PV industry.

The company has continued to develop high-efficiency multi and mono technologies having introduced its monocrystalline PERCIUM series utilizing PERC technology with an average conversion efficiency of over 21.0%, and its multicrystalline RIECIUM series utilizing RIE (Reactive Ion Etching) texturing to enable the use of diamond wire technology on multicrystalline wafer and has conversion efficiencies of over 19.2%.

A key focus of development has been bifacial PERC-based cell and module development in 2016, which led to new product introductions in early 2017.

Yingli Green

Major financial issues have forced Yingli Green to drastically cut costs across its entire operations in the last two years. With R&D spending cuts, Yingli Green was ranked tenth in 2016, down from third in 2015.

However, Yingli Green continued to invest in its Project PANDA, a research and development project for next-generation high efficiency monocrystalline PV cells, established back in June 2009. The company noted that by the end of 2016, it had achieved an average cell conversion efficiency rate of 20.8% on the PANDA (N-type mono PERT) commercial production lines.

Further development is on-going to improve N-PERT cell performance with doping, passivation and metallization enhancements. Yingli’s roadmap is aiming for 22% efficiency of N-PERT cell for production.

The company also had its PANDA bifacial module receive China’s ‘Front Runner certification at the end of 2016 and is the leading supplier of the technology to date and is aiming to develop a bifacial cell with bifaciality greater that 95%.

Canadian Solar

Canadian Solar has continued to place greater emphasis on module efficiency improvements, focused on P-type multicrystalline technology and has been a perennial low spender on R&D.

The company allocated US$17.4 million to R&D activities in 2016, up slightly from US$17.05 million in 2015. As a result the company just about traded places with estimated spending from REC Solar to be ranked eleventh, compared to twelfth in 2015.

Canadian Solar began commercializing its in-house developed black silicon technology, Onyx technology, on multicrystalline wafers to be used with PERC technology, which entered mass production in March 2016.

Indeed, Canadian Solar is placing a potentially risky bet on pushing ahead with this technology combination after stating at the PV CellTech conference in early 2017 that it would continue to focus on this technology in R&D. However, the company also has small-scale initiatives on N-type bifacial and heterojunction cell development.

REC Group

We have estimated that the REC Group continued to tweak R&D expenditures slightly down from US$17.4 million from figures provided by the company that year to around US$16 million in 2016.

This meant it traded places with Canadian Solar, almost six times larger, from a module manufacturing capacity standpoint to be ranked twelfth in the R&D spending rankings in 2016.

The company was sold to Bluestar in late 2014 and delisted from the Norwegian Stock Exchange in 2016.

With the adoption of PERC cell technology and an ongoing transition to 100% P-type multicrystalline PERC production with half-cut cells, R&D intensity into PERC was expected to slowdown and therefore R&D expenditure lowered in 2016.

However, spending on PERC efficiency and production cost reductions was expected to account for a key percentage of R&D expenditure in 2016 and beyond. The company had focused on improving light capture of PERC cells and migrate to 5BB technology to reduced cell resistance in 2016.

R&D efforts were expected to continue in the field of diamond wire and black silicon technology ahead of the migration in 2017. Like other previously exclusive multicrystalline manufacturers, development of monocrystalline PERC product offerings would also receive investment in 2016 and beyond.

Cumulative R&D spending rankings and analysis

As previously highlighted in our 2015 report, we expected First Solar to exceed the US$1.0 billion mark in cumulative (since 2007) R&D spending. Indeed, First Solar surpassed that mark in 2016, reaching a cumulative US$1,027.8 million in R&D expenditure, making it the first module manufacturer to do so.

First Solar has no equal in the PV industry for investment in R&D activities over the last 10 years.

12 Key PV Module Manufacturers Cumulative R&D Spending (US$ Millions) 2007-2016.12 Key PV Module Manufacturers Cumulative R&D Spending (US$ Millions) 2007-2016.

Second in the cumulative R&D spending rankings is SunPower, which was expected to surpass the US$500 million market in 2016. Through much of the period, SunPower has been ranked second or third in annual spending and with its increased spend in 2016, easily surpassed that figure reaching a total spend of US$583.2 million over the last 10 years.

SunPower is only the second company to surpass cumulative R&D spending of over US$500 million, a figure not expected to be reached by another company over the next four years or more.

Due to its previous high R&D expenditure and PV market leadership position, Yingli Green is the third ranked for cumulative R&D spending. The company reached cumulative R&D spending over the last 10 years of US$356.7 million.

In fourth place is ReneSola, having cumulative R&D spending over the last 10 years of US$322.8 million. Since 2010, ReneSola had been a consistently high investor in R&D activities, which only in 2016 experienced a significant decline, due to its business transition. R&D spending peaked in 2014 at US$52.6 million.

SolarWorld was ranked fifth with cumulative R&D spending over the last 10 years of US$269.4 million. The company had spent no less than US$25 million per annum from 2010 onwards and peaked spending just short of US$50 million in 2012.

In the middle of the field, REC Solar, Trina Solar and Suntech had cumulative R&D spending of US$225.5 million, US$218.8 million and US$215.9 million, respectively over the 10 year period.

Three companies, Hanwha Q CELLS, JA Solar and Canadian Solar had cumulative R&D spending of US$171.4 million, US$132.4 million and US$103.6 million, respectively, highlighting spending over the 10 year period was below the US$200 million market but above the US$100 million level.

The only company that had cumulative R&D spending below US$100 million was JinkoSolar, which achieved a total spend of US$98.3 million between 2007 and 2016.

What does 10 years of R&D spending tell us?

On the surface, the most telling aspect of tracking R&D spending for a decade is the lack of correlation to market leadership, notable by JinkoSolar’s current leadership position and that of Trina Solar, preceding 2016 for two years.

Perennial laggard Canadian Solar has also supported that thesis having climbed the rankings tables (of annual module shipments) in recent years to become the third largest producer.

At the other end of the scale, First Solar and SunPower have dominated R&D spending levels in this period and yet only First Solar topped the rankings table for a short period. Although retaining a top 10 position for many years, it has been surpassed by companies with a need to spend a fraction in R&D to be leaders.

Worse is the position of SunPower through the last 10 years, having lost market share and ranking positions almost throughout the period without fail.

Interestingly, both SunPower and First Solar have proprietary technologies that require custom production equipment yet both are in major manufacturing transitions. It would be highly unlikely either company could come out the other side stronger without the history of investment in R&D.

Time will tell if that theory holds true but it is reasonable to assume that a major technology transition by the likes of JinkoSolar or Canadian Solar would not make the companies stronger given the lack of investment.

Indeed, JinkoSolar has probably seen the writing on the wall and started a major boost in R&D spending a few years ago. This has been led by p-type mono PERC expansions and less reliance on P-type multi technologies. In contrast, Canadian Solar is sticking with P-type multi technologies, so time will tell if that strategy works.

It should also be noted that until 2015 there had not been a major technology buy cycle with a significant migration to PERC technology and the adoption of IBC and HJ technology outside historical incumbents SunPower and Panasonic, respectively.

What we are alluding to is that 10 years of R&D spending behaviour has not forward projected market leadership, unlike what has been seen in the semiconductor industry. That said, 10 years of R&D spending behaviour in the solar industry may take longer to work its way through. Clearly, that theory rests with the likes of First Solar and SunPower over the next few years.

End of an era

Reflected throughout the 2016 report has been the increased reliance on estimated figures. When the analysis originally began, all 12 manufacturers were publically listed companies and therefore official and verifiable figures were available.

There had been moments when estimates had to be made, such as when Suntech was bankrupt but was soon back in action in another publically listed company, enabling continued reporting. Problems occurred when REC split into two companies but these two companies remained public.

However, a few years later, REC’s module manufacturing arm was acquired by a private Chinese enterprise and has since stopped providing the necessary figures for this report. Trina Solar, the second largest PV manufacturer in 2016 went private before having to release official figures for 2016, adding to the need to use estimates.

The issues continued to mount in 2017, when SolarWorld entered insolvency proceedings and, although back in business, it is no longer publically listed and estimates would have to be used for the next report. The same could happen with ReneSola, with its manufacturing operations potentially spun-off into private hands. JA Solar and JinkoSolar could follow Trina Solar in delisting and going private as well.

Already four of the twelve manufacturers have gone private and the study has become significantly less representative of the sector than in the past. The greater dependency on estimated figures would also further undermine the value of the report and its analysis in the future.

We should all be aware of how dynamic and sometimes brutal the PV manufacturing industry can be and this report has clearly plotted some of those events over the years, not least the first major industry downturn.

However, we have been closely watching the rise of other manufacturers in the last few years, notably LONGi Solar, GCL-SI and more recently Jolywood, all publically listed in China with the possible inclusion in a new collection of companies with those still relevant from our original group since 2007.

With the uncertainties surrounding how many companies will still be relevant to continue with from the original group and how best to integrate much newer companies, means that it is definitely an end of era with this report, but a decision on continuing, although with new additions, will be made at a later date.

Source: PV-Tech

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